Archive for May 8, 2012

Budgeting for Piggy Bank Savers

When should a commitment to financial giving start?

I think that giving back financially is a good discipline that, done correctly, increases the appreciation for what you have, and helps you feel empowered in your ability to help others.

My friend Peggy Duvette was recently telling me about her daughter Suada, who last year, at 8 years old was choosing to support her school with a donation. Suada had taken some of her money to her school fair to play games and buy things. When she finished the day and had some money left over, she spontaneously told her mom that she wanted to give the rest as a donation to the school. I was impressed by Suada’s generosity and even her awareness that her school might need to be supported. Peggy said that her own role as Executive Director (which also means “head fund raiser”) for a non-profit (, The Social Network for Sustainability) meant that Suada has had more exposure to the notion of giving, but Peggy has also set up a system 3 years ago that helps Suada budget her money between current needs and future ones, for herself and others.

Teaching good financial habits is something that parents can start early with their children: the gift of a piggy bank at age 6 (or so, kids do develop the concept of money at different rates) is also an opportunity to talk about money being divided into that you might spend today and that money that you save for future needs. Peggy had gotten a piggy bank for Suada, where every time she received money, she would automatically split it between spending and saving. A year later, she incorporated the concept of donating.

Basic budgeting is a critical skill for keeping your financial house in order, and starting early makes it seem more natural later.  Dave Ramsey, the popular financial guru, recommends an “envelope system” to budget the monthly expenses for key categories.

While your kindergartner might not have “rent”, “clothing”, and “gas” expense categories, setting aside money to “save” separate from what they may “spend” is a good start.  To get them started thinking about giving early on, how about encouraging them to put a dime into the “giving” envelope every time they put a dollar in one of the other categories?

Of course, what gives the “envelope system” part of its power is its tangibility.  The money for the month for the category is in the envelope, and when you’ve spent it, it’s gone.  That tangibility is great for kids, too.  Only they get to watch their money grow, not disappear.  If you would like to buy one,  lists 6 different ones.

But making one can mean there’s more money to put in it.  It can also be a fun family project, and needn’t be complex: